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Abu Dhabi, UAETuesday 11 December 2018

About 50 financial firms turn to the Netherlands as Brexit looms

Companies are considering licences outside the UK to maintain access to EU customers

Amsterdam is a popular destination for a Brexit exodus. AP
Amsterdam is a popular destination for a Brexit exodus. AP

As Brexit nears, the Dutch authorities processing banking and markets licenses are starting to feel the heat.

About 50 banks and other financial institutions are having or have had talks with the Dutch central bank about setting up shop in the Netherlands, according to Tobias Oudejans, a spokesman for the institution.

Fewer than five companies have been granted licences so far, but “we are in discussion with several tens of institutions” that are seriously considering new licenses because of Brexit, he said.

He declined to be more specific on how many companies’ interest has been driven by the prospect of a no-deal scenario, where Britain’s trade ties would be abruptly cut off from the rest of the European Union. Prime Minister Theresa May is campaigning to get British lawmakers to back the divorce deal she struck with the EU, but the outcome if they vote it down later this month is uncertain.

“Virtually every kind of financial institution we supervise in our country is represented in these talks,” said Mr Oudejans, who commented by email and phone.

Mr Oudejans declined to be more specific on figures, saying some of the banks, insurers, investment firms and payment-services companies may ultimately decide to apply in a different nation to maintain their access to customers in the European Union.

The Dutch are set to make solid gains from Brexit. Most major speed trading firms and the venues they trade upon have chosen Amsterdam as their post-Brexit EU hub given its central role for market makers of exchange-traded funds and derivatives.

To avoid potential disruption from a no-deal scenario, CME Group is moving its European market for short-term financing to Amsterdam, which is also becoming the new home of the European Medicines Agency. In the media world, Discovery is laying the groundwork to move employees and broadcast licenses there should it become clear that no deal is likely, according to people familiar with the matter.

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Some of the financial entities considering a shift to the Netherlands are partly regulated by AFM, the Dutch markets regulator.

“In these cases AFM will handle the application, while we take care of the prudential side of supervising these entities,” Mr Oudejans said of the central bank’s role. “While we may be in talks with them, their possible application will be handled by AFM.”

Regulatory officers handling the applications are “a lot busier than usual”, he said.

The AFM said last month it expects more than 20 financial firms - most of them trading specialists - will relocate from the U.K. to the Netherlands. The actual number of new arrivals may be even higher, officials said at the time, since some firms are applying at the last minute or have requests pending.

Any firm wanting to trade with EU-based clients needs to have a regulated entity in place before the U.K. formally leaves the bloc on March 29.